Quiz 3 (Ch 3)

Answer the question on the basis of the given supply and demand data for wheat. Bushels Demanded Per Month Price Per Bushel Bushels Supplied Per Month 45 $5 77 50 4 73 56 3 68 61 2 61 67 1 57 Equilibrium price will be

$2

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand is D0, then

0F represents a price that would result in a shortage of AC.

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Price Buyer 1 Qd 1 Buyer 2 Qd 2 Buyer 3 Qd 3 $6 7 4 6 5 9 7 8 4 15 10 12 3 21 15 16 Suppose now that there are 200 buyers in a market, each with a demand schedule identical to Buyer 2 in the table above (no one is similar to either Buyer 1 or Buyer 3). What would the weekly quantity of hamburger demanded in the market at a price of $4 be?

2,000

If the demand curve for product B shifts to the right as the price of product A declines, then:

A and B are complementary goods.

Which statement best illustrates the concept of diminishing marginal utility?

A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week.

Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: the market for corn, if gasoline producers use more ethanol from corn and good weather during the growing season yields a bumper harvest.

Graph A

Select the graph above that best shows the change in the market for wheat, when the cost of fertilizer decreases.

Graph C

Select the graph above that best shows the change in the market specified in the following situation: the market for digital cameras, when the productivity of workers in the digital camera industry increases.

Graph C

Assume that the graphs show a competitive market for the product stated in the question. Select the graph that best shows the change in the market for Florida oranges, when a major frost damages the orange crop in California.

Graph D

An "increase in the quantity supplied" suggests a

Movement up along the supply curve

Buyers and sellers do not have to deal face-to-face with one another in markets.

True

If there is a surplus in a market, competition among the sellers will drive price down.

True

In the market for sushi, an increase in supply and a greater decrease in demand will cause both the equilibrium price and quantity to decrease.

True

The development of a new production technique that lowers the cost of producing 3-D movies will shift the supply curve of 3-D movies to the right.

True

Which of the following will not cause a change in the demand for product A?

a change in the price of A

Which of the following would cause a shift in coffee demand from D1 to D2?

an increase in consumer incomes

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

an increase in demand has been more than offset by increase in supply.

The price of pork may increase as a result of

an increase in the cost of producing beef

Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to violation of the

ceteris paribus assumption.

Blu-ray players and Blu-ray discs are:

complementary goods

When an economist says that the demand for a product has increased, this means that

consumers are now willing to purchase more of this product at each possible price.

All markets involve the following elements, exceptf

face-to-face negotiation.

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Price Buyer 1 Qd 1 Buyer 2 Qd 2 Buyer 3 Qd 3 $6 7 4 6 5 9 7 8 4 15 10 12 3 21 15 16 If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will

increase from 24 to 52

(Last Word) According to research by the New York Federal Reserve Bank, which of the following best explains rising tuition costs over the past several years?

increased Federal subsidies for student loans

A demand curve

indicates the quantity demanded at each price in a series of prices.

A higher price reduces the quantity demanded for a product because

individuals can afford less of the product and will switch to substitutes.

(Advanced analysis) The equation for the demand curve in the below diagram

is P=35 - .5Q

(Consider This) Uber's dynamic pricing

keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions.

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n):

leftward shift in the current supply of corn.

If a legal ceiling price is set above the equilibrium price,

neither the equilibrium price nor the equilibrium quantity will be affected.

The demand curve shows the relationship between

price and quantity demanded

Refer to the diagram above, which shows three supply curves for corn. A movement from point a to point b is caused by a change in the

price of corn in the market

The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is

price.

Answer the question on the basis of the given supply and demand data for wheat. Bushels Demanded Per Month Price Per Bushel Bushels Supplied Per Month 45 $5 77 50 4 73 56 3 68 61 2 61 67 1 57 If price was initially $4 and free to fluctuate, we would expect the

quantity of wheat supplied to decline as a result of the subsequent price change.

{picture} Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then

sellers will quickly run out of corn that they bring to market.

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. Given this market, if the event organizers pre-set the price at $20, then this action would result in a

shortage of 5,000 units

If there is a shortage of product X, and the price is free to change,

the price of the product will rise.

If an economy is being "productively efficient," then that means the economy is

using the least costly production techniques

In order to derive the market supply curve from individual supply curves, we add up the

various quantities that individual sellers want to sell at specific price levels.

Which of the following statements is true about productive and allocative efficiency?

Realizing allocative efficiency implies that productive efficiency has been realized.

Which would cause an increase in the supply curve of cell-phone services?

a decrease in the wages of cell-phone company workers

(Consider This) Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016. Based on this information, we can conclude that the

demand for coffee beans has increased.

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will

increase, quantity demanded will decrease, and quantity supplied will increase.

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

an increase in supply

A leftward shift of the supply curve for oil in the United States is mostly likely to result from

an increase in the costs of exploration and drilling for oil

Consider the supply and demand curves depicted in the diagram above. If the government imposed a price ceiling of $15, then buyers will be intending to buy _______, but they will be able to legally buy _______.

36 units; 24 units

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that

Demand for clothing has grown faster than the supply of clothing

A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level.

False

An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the equilibrium quantity.

False

If the government subsidizes the car makers in the production of cars, then the supply of steel increases.

False

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

False

When a fruit or vegetable (such as strawberries or lentils) is in season, the demand fo it will increase as it becomes cheaper.

False

A surplus of a product will arise when price is

above equilibrium with the result that quantity supplied exceeds quantity demanded.

The demand for most products varies directly with changes in consumer incomes. Such products are known as

normal goods.

All of the following would affect the position of the supply curve for cranberries, except the

popularity of cranberry drinks.

There is a shortage in a market for a product when

quantity demanded is greater than quantity supplied.

Which of the following factors is a "demand shifter" for new houses?

the interest rates on mortgage loans

Allocative efficiency refers to

the production of the product mix most wanted by society.

At the point where the demand and supply curves for a product intersect,

the quantity that consumers want to purchase and the amount producers choose to sell are the same.

Productive efficiency refers to

the use of the least-cost method of production.